OCCUPIED JERUSALEM, 2 March 2004 — An Israeli court yesterday ordered the freezing of millions of dollars seized by the army last week from Palestinian banks, at the request of relatives of an American-Israeli couple killed by Palestinian fighters, sources said.

The families of Yaron and Efrat Ungar, Jewish settlers who were shot dead by Hamas in 1996 as they left a wedding in the Gaza Strip, filed the request at Tel Aviv district court in the wake of the seizure of the money in raids in Ramallah last week which was allegedly used to finance “terrorist actions.”

A US judge earlier this year ordered the Islamist group to pay more than $116 million to relatives of the couple.

Security sources said between seven and nine million dollars seized during the raids last Wednesday were intended to buy arms and explosives, or to pay off anti-Israeli fighters or their families if they were killed.

Palestinian Prime Minister Ahmed Qorei reacted angrily to the raids, describing them as “a Mafia act, nothing more, nothing less.”

Israeli Defense Minister Shaul Mofaz pledged in a statement that the confiscated sums would go toward “humanitarian actions” for the Palestinian people.

The ruling yesterday effectively means that the government will not be able to distribute the funds for the moment.

A judge sitting in the northeastern US state of Rhode Island ordered Hamas on Jan. 28 to pay $116,409,123 to relatives of the Ungars.

They had sued Hamas under a law that allows American victims of overseas terrorist attacks to claim damages in US courts.

Meanwhile, the barrier being built by Israel around Jerusalem will be completed by the end of the year, Interior Minister Tzahi Hanegbi said yesterday, after a court order to freeze construction on a 42-km section.

“The security fence, whose purpose is to save lives, will be finished by the end of the year around Jerusalem,” Hanegbi told public radio.

Israel’s Supreme Court Sunday ordered the suspension of building work on a section of the barrier northwest of Jerusalem where two Palestinian protesters were killed last week.

The order, which will remain in force until next week, allows the court to examine appeals presented by residents of eight Palestinian villages in the West Bank against construction of the barrier on their land.

Mofaz, who paid a visit to the site on Sunday, denounced the court’s decision, saying, “Any judicial delay will give a suicide bomber the chance to enter Israeli territory.”

Hanegbi sought to play down the impact of the ruling. “Israel is a state governed by the rule of law and the delay caused by the judicial authorities is minimal,” he said.

“I hope that the Supreme Court rejects the appeals as soon as possible.”

State President Moshe Katzav said that the verdict of the court should be respected.

“But on the other hand, we must also accelerate construction of the security fence which is the most effective method of protecting residents,” he told the radio.

The Israeli government says the barrier is vital to put an end to the wave of attacks, which have been launched by Palestinian militant groups since the start of the intifada in September 2000.

The Palestinians say the route of the barrier, which often juts deep inside their territory, shows it is tantamount to a land grab.

Reserve general Uzi Dayan, who heads a group lobbying for rapid construction of the barrier as close as possible to the contours of the official Israel-West Bank border, said it was disingenuous for the likes of Mofaz to blame the court for delays as the government was responsible for its tortuous route.